Inventory Accounting Policy

Crude oil, products and merchandise inventories are carried at the lower of current market value or cost (generally determined under the last-in, first-out method – LIFO). Inventory costs include expenditures and other charges (including depreciation) directly and indirectly incurred in bringing the inventory to its existing condition and location. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory cost. Inventories of materials and supplies are valued at cost or less.

Exxon Mobil Corp.’s inventory value on Dec 31, 2018 would be $27,158 (in millions) if the FIFO inventory method was used instead of LIFO. Exxon Mobil Corp.’s inventories, valued on a LIFO basis, on Dec 31, 2018 were $18,958 . Exxon Mobil Corp.’s inventories would have been $8,200 higher than reported on Dec 31, 2018 if the FIFO method had been used instead.

An activity ratio calculated as total revenue divided by adjusted total assets.

Exxon Mobil Corp.’s adjusted total asset turnover improved from 2016 to 2017 and from 2017 to 2018.

Adjusted financial leverage

A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.

Exxon Mobil Corp.’s adjusted financial leverage declined from 2016 to 2017 and from 2017 to 2018.

Adjusted ROE

A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.

Exxon Mobil Corp.’s adjusted ROE improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

Adjusted ROA

A profitability ratio calculated as adjusted net income divided by adjusted total assets.

Exxon Mobil Corp.’s adjusted ROA improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.

Exxon Mobil Corp.’s adjusted financial leverage declined from 2016 to 2017 and from 2017 to 2018.